Norwegian man buys apartment with $24 forgotten "Bitcoin" investment

Oslo (AFP) - A Norwegian man who purchased $24 worth of bitcoins and then promptly forgot about it for four years, was able to buy an apartment in central Oslo thanks to the massive appreciation of the virtual currency.
In 2009, Kristoffer Koch was doing research on encryption and on a whim decided to invest a small sum in the recently created bitcoins -- a means of payment over the Internet.
Koch, now 29 and working as an engineer, only remembered the investment in April of this year when he read an article about the soaring value of bitcoins.
His 5,000 bitcoins were suddenly worth around $690,000 (500,000 euros).
After spending a full day trying to remember his password, Koch cashed in 1.1 million kroner (135,000 euro, $186,000), by selling a fifth of his newly acquired fortune.
After deducting 28 percent in taxes, the money was enough for the downpayment and restoration of a flat worth 2.6 million kroner in central Oslo, one of the world's most expensive cities.
"Not in my wildest dreams could I have imagined that they would have soared like this," Koch said.
"It's bizarre, these psychological reflexes that make us attach a value to something that doesn't have any in itself."
Bitcoins can be exchanged for real money or used to purchase goods and services online.
The virtual currency is increasingly used for Internet transactions and its value is extremely volatile, subject to speculation.

An untraceable, peer-to-peer digital wallet system introduced by Satoshi Nakamoto in January 2009 (Nakamoto's true identity is unknown).Bitcoins are a "virtual currency" that is not sanctioned by any government. Often called a "digital Ponzi scheme," the value of a Bitcoin (BTC) gyrates wildly and has increased exponentially from a few cents to more than a hundred U.S. dollars in 2013. In April 2013, it briefly reached $266 before settling back. People Make Their Own The strangest thing about Bitcoins is that they are created by users in their own computers with a Bitcoin "miner" application. Although the generation can take a very long time, rafts of servers have been employed to make them faster, and a botnet was discovered that harnessed unsuspecting users' computers to do the job. Bitcoins can also be bought and sold for real money at a Bitcoin exchange. As of 2011, there were approximately six million Bitcoins in existence; however, the total is theoretically capped at 21 million by the year 2140.There is no central clearing house or repository for Bitcoins. The Bitcoins and the transactions are stored in each user's digital wallet in the computer, making it a nearly untraceable currency. Although the transactions themselves are available to the public, the source and destination addresses of the Bitcoin transfer are encrypted. There Is a Market A market exists, because there are companies selling products and people willing to do work in exchange for Bitcoins. Traction - Then Hacking By late 2010, Bitcoins were beginning to gain some traction in the world, but mostly in the open source and underground communities. By mid-2011, there was an attack on the Mt. Gox Bitcoin exchange, and that June, someone claimed a hacker extracted 25,000 Bitcoins from his personal computer worth nearly $500,000. Also, in June 2011, members of the U.S. Congress began a legislative attempt to make the currency illegal. For more information, visit www.bitcoin.org and www.bitcoincharts.com. See Web payment service and digital wallet.

The guy in Oslo is not going be a victim of Tulipmania. He already bought an apartment. Assuming he cashed out the rest of his "Bitcoins" that $24 was the greatest investment since the Indians sold Manhattan for the same price.

The guy in Oslo is not going be a victim of Tulipmania. He already bought an apartment. Assuming he cashed out the rest of his "Bitcoins" that $24 was the greatest investment since the Indians sold Manhattan for the same price.

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Still not as good as the guy who sold Stern a house in Palm Beach for $52 million

The guy in Oslo is not going be a victim of Tulipmania. He already bought an apartment. Assuming he cashed out the rest of his "Bitcoins" that $24 was the greatest investment since the Indians sold Manhattan for the same price.

Obviously when the music stops someone will be left holding the bag. You could say the same thing about all world currencies. The thing with Bitcoins is they were created from nothing and not backed by any country. Someone decided they have value. The key is not to be the last man standing.

An untraceable, peer-to-peer digital wallet system introduced by Satoshi Nakamoto in January 2009 (Nakamoto's true identity is unknown).Bitcoins are a "virtual currency" that is not sanctioned by any government. Often called a "digital Ponzi scheme," the value of a Bitcoin (BTC) gyrates wildly and has increased exponentially from a few cents to more than a hundred U.S. dollars in 2013. In April 2013, it briefly reached $266 before settling back. People Make Their Own The strangest thing about Bitcoins is that they are created by users in their own computers with a Bitcoin "miner" application. Although the generation can take a very long time, rafts of servers have been employed to make them faster, and a botnet was discovered that harnessed unsuspecting users' computers to do the job. Bitcoins can also be bought and sold for real money at a Bitcoin exchange. As of 2011, there were approximately six million Bitcoins in existence; however, the total is theoretically capped at 21 million by the year 2140.There is no central clearing house or repository for Bitcoins. The Bitcoins and the transactions are stored in each user's digital wallet in the computer, making it a nearly untraceable currency. Although the transactions themselves are available to the public, the source and destination addresses of the Bitcoin transfer are encrypted. There Is a Market A market exists, because there are companies selling products and people willing to do work in exchange for Bitcoins. Traction - Then Hacking By late 2010, Bitcoins were beginning to gain some traction in the world, but mostly in the open source and underground communities. By mid-2011, there was an attack on the Mt. Gox Bitcoin exchange, and that June, someone claimed a hacker extracted 25,000 Bitcoins from his personal computer worth nearly $500,000. Also, in June 2011, members of the U.S. Congress began a legislative attempt to make the currency illegal. For more information, visit www.bitcoin.org and www.bitcoincharts.com. See Web payment service and digital wallet.

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The best chain (black) consists of the longest series of transaction records from the genesis block (green) to the current block or record. Orphaned records (purple) exist outside of the best chain.

The mining process involves scanning for a value that when hashed twice with SHA-256, begins with a number of zero bits. While the average work required increases exponentially with the number of leading zero bits required, a hash can always be verified by executing a single round of double SHA-256.
For the Bitcoin timestamp network, a valid "proof-of-work" is found by incrementing a nonce until a value is found that gives the block's hash the required number of leading zero bits. Once the hashing has produced a valid result, the block cannot be changed without redoing the work. As later records or "blocks" are chained after it, the work to change the block would include redoing the work for each subsequent block.
The best chain (black) consists of the longest series of transaction records from the genesis block (green) to the current block or record. Orphaned records (purple) exist outside of the best chain.

Majority consensus in Bitcoin is represented by the longest chain, which required the greatest amount of effort to produce it. If a majority of computing power is controlled by honest nodes, the honest chain will grow fastest and outpace any competing chains. To modify a past block, an attacker would have to redo the proof-of-work of that block and all blocks after it and then surpass the work of the honest nodes. The probability of a slower a attacker catching up diminishes exponentially as subsequent blocks are added.To compensate for increasing hardware speed and varying interest in running nodes over time, the difficulty of finding a valid hash is adjusted roughly every 2 weeks. If blocks were generated too fast, the difficulty increases and more hashes are required to find a block and to generate new bitcoins. Bitcoin mining is a competitive endeavor. An arms race has been observed through the various hashing technologies that have been used to mine bitcoins: basic CPUs, High-end GPUs (Graphical Processing Units) common in many gaming computers, FPGAs (Field Programmable Gate Arrays) and ASICs (Application-specific integrated circuits) all have been used with the latter reducing profitability of each former technology. The newest addition, ASICs, are built into devices that are specialized for Bitcoin mining.

^---From the Wikipedia entry on Bitcoin Mining. Probably more than you wanted to or cared to know, but there's an over view of it. Some people have racks of high end video cards running 24/7, like an actual freakin' mining operation, one guy even had the Feds bust in on him because of how high his light bill was every month, they thought he was growing pot on his property. Nope: just mining.